Wickham earns reputation, now hopes for profit Innovative tool firm almost went under

May 02, 1993|By Ross Hetrick | Ross Hetrick,Staff Writer

The J. L. Wickham Co. built its reputation on finding innovative solutions to industrial problems. Now Chairman Richard P. Sullivan has another goal for the Baltimore machine tool company -- making a profit.

"By the time we finish 1993, I think we should be able to turn a profit. That's our plan," he said.

That would be a dramatic turnaround for the 10-year-old company, which began as a symbol of Baltimore's high-tech manufacturing future. Wickham captured the imagination and money of investors, including the city's quasi-public Enterprise Development Fund and the Abell Foundation, before slipping to the brink of extinction last year.

And it would provide a sharp contrast between the two men most responsible for the company's fortunes: founder John L. "Jack" Wickham, who left last October, and Mr. Sullivan, the investment company executive tapped to lead a turnaround.

The company, situated in a nondescript, one-story cinder block building on Belair Road, produces multimillion-dollar machines that make parts for other machines. Its machine tools can make a greater variety of parts, producing them faster and with greater precision -- qualities that have brought orders from manufacturers such as General Motors Corp., Chrysler Corp. and Deere & Co.

It was the brainchild of Mr. Wickham, a former Black & Decker Corp. engineer who helped develop prototype machines for the tool and appliance maker to solve productivity problems.

His plan, to bring high-tech solutions to traditional manufacturing,captivated investors and held special appeal in Baltimore, which was losing more than 1,000 manufacturing jobs annually. The Enterprise Development Fund, which lends and invests money for start-up companies, bought $100,000 worth of stock in December 1987 and an additional $17,580 in early 1991, said fund director Ellen J. Wiggins.

Acclaim for the company and its founder continued as Wickham's revenues grew. In 1990, when Mr. Wickham received the Entrepreneur of the Year award from the state Department of Economic and Employment Development, he launched into what one observer called a sales pitch, complete with a sample of what his machines can make.

"He was like the proud father," said John C. Weiss, who was at the awards ceremony. "It was a wonderful experience."

But while the company received accolades, it was chewing through millions of dollars in capital without showing a profit. From its founding until mid-1992, the company ate up $6 million in capital, ending up with a negative net worth.

Mr. Weiss, managing director of the Maryland Venture Capital Trust, a state-supported investment fund, praises Mr. Wickham as a "genius" able to quickly find solutions to industrial problems. But Mr. Weiss, who has known Mr. Wickham for about nine years, says that strength -- particularly his personal involvement in the company -- was also his weakness.

"I don't know that Jack ever effectively delegated the management responsibility," -- a common problem, he said, among companies founded by visionaries.

Last May -- just a year after a cash infusion of $3.3 million from investors -- Wickham was again short of money. And the board of directors was forced to confront an unpleasant option: closing -- down the company.

They turned to Mr. Sullivan, president of the investment firm Ferris, Baker Watts Inc., which was one of the major stockholders in the privately held company. He was named president and chief executive officer, leaving Mr. Wickham as chairman.

Mr. Sullivan had plenty of background in manufacturing. He served as a top executive at Easco Corp., a Baltimore-based manufacturer of hand tools, for more than two decades -- including 12 years as chairman and chief executive officer before it was sold to Washington-based investors in 1985. (Before going to Ferris, Baker in 1987, he had made an unsuccessful bid for the U.S. Senate against Sen. Barbara Mikulski.)

When he came in May, he looked over the company with the eye of an investment banker. The key question: "Are the problems solvable?"

At that point, the company could not continue without another infusion of capital. "We came to the conclusion it was worth trying to fix [the problems]," Mr. Sullivan said. But he also came to the conclusion that Mr.Wickham had to go.

"It was a very tough decision," Mr. Sullivan said. "His name is on the sign and the machines."

NB Efforts to find Mr. Wickham another role in the company didn't

work out. "He wanted to have total control . . . and the history was it didn't work," Mr. Sullivan said.

So in October, Mr. Sullivan assumed the title of chairman and Mr. Wickham left (though he remains a major shareholder). And in late January, Mr. Sullivan resigned from Ferris, Baker Watts to devote his efforts to Wickham.